loader  Loading... Please wait...

Question(s) / Instruction(s):

126.     The asset section of the January 1, 20X7, balance sheet of Petticoat Company includes a machine which was acquired on January 1, 20X3. The machine's original cost was $500,000, and the estimated life was determined to be 10 years. The estimated residual value was zero, and the straight-line method of depreciation was chosen. If operating income before depreciation is $90,000, the rate of return on average net book value for 20X7 is:

     a.     14.55%
     b.     13.33%
     c.     16.00%
     d.     32.79%
127.     


 

     a.     Gross book value at future cost
     b.     Gross book value at historical cost
     c.     Net book value at current cost
     d.     Net book value at historical cost

128.     Historical cost is widely used for asset valuation because it:

     a.     is more objective than current cost
     b.     requires no additional data collection
     c.     is more useful for predicting the effects of decision making
     d.     All of these answers are correct.

129.      The following information pertains to Gloria Company:

     Current assets     $200,000     Current liabilities     $100,000
     Property, plant and
          equipment     400,000     Long-term liabilities     200,000
     Construction in progress     50,000     Stockholders' equity     350,000
          Total assets     $650,000               Total equities     $650,000

     Invested capital is


 

     a.     $650,000
     b.     $600,000
     c.     $550,000
d.     $350,000

     


130.          The following information pertains to Gable Company:

     Current assets     $200,000     Current liabilities     $100,000
     Property, plant and
          equipment     400,000     Long-term liabilities     200,000
     Construction in progress     50,000     Stockholders' equity     350,000
          Total assets     $650,000               Total equities     $650,000

     Invested capital is


 

     a.     $650,000
     b.     $600,000
     c.     $550,000
     d.     $350,000

     

131.          The following information pertains to Clark Company:

     Current assets     $200,000     Current liabilities     $100,000
     Property, plant and
          equipment     400,000     Long-term liabilities     200,000
     Construction in progress     50,000     Stockholders' equity     350,000
          Total assets     $650,000               Total equities     $650,000

Invested capital is


 

     a.     $650,000
     b.     $600,000
     c.     $550,000
     d.     $350,000

132.     The following information pertains to Stewart Company:

     Current assets     $100,000     Current liabilities     $75,000
     Property, plant and
          equipment     150,000     Long-term liabilities     100,000
     Construction in progress     50,000     Stockholders' equity     125,000
          Total assets     $300,000          Total equities     $300,000


     Invested capital is


 

     a.     $300,000
     b.     $250,000
     c.     $225,000
     d.     $100,000


133.     The following information pertains to Calhoun Company:

     Current assets     $100,000     Current liabilities     $75,000
     Property, plant and
          equipment     150,000     Long-term liabilities     100,000
     Construction in progress     50,000     Stockholders' equity     125,000
          Total assets     $300,000          Total equities     $300,000

     Invested capital is


 

     a.     $300,000
     b.     $250,000
     c.     $225,000
     d.     $100,000

     
134.     The following information pertains to Webster Company:

     Current assets     $100,000     Current liabilities     $75,000
     Property, plant and
          equipment     150,000     Long-term liabilities     100,000
     Construction in progress     50,000     Stockholders' equity     125,000
          Total assets     $300,000          Total equities     $300,000


     Invested capital is


 

     a.     $300,000
     b.     $250,000
     c.     $225,000
     d.     $100,000

     

135.     The following information pertains to Polk Company:

     Current assets     $100,000     Current liabilities     $75,000
     Property, plant and
          equipment     150,000     Long-term liabilities     100,000
     Construction in progress     50,000     Stockholders' equity     125,000
          Total assets     $300,000          Total equities     $300,000

     Invested capital is


 

     a.     $300,000
     b.     $250,000
     c.     $225,000
     d.     $125,000

LEARNING OBJECTIVE 6

136.      Transfer prices are:

     a.     costs of the segment producing the product or service
     b.     revenues of the segment acquiring the product or service
     c.     revenues of the segment producing the product or service
     d.     None of these answers is correct.

137.     Transfer pricing systems exist to:

     a.     encourage managers to purchase goods and services internally
     b.     maximize worldwide taxes, duties, and tariffs
     c.     evaluate segment performance
     d.     All of these answers are correct.

138.     A transfer price exists when two segments of the same organization:

     a.     sell a product to the same customer
     b.     sell a service to each other
     c.     sell a product in a foreign country
     d.     sell the same service to competitors

LEARNING OBJECTIVE 7

139.     


 

     a.     Variable cost     
     b.     Full cost
     c.     Actual cost     
     d.     Fixed cost

140.      


 

     a.     Congruent behavior
     b.     Managerial effort
     c.     Dysfunctional behavior     
     d.     Negotiating


141.      Reed Company records reveal the following:

          Division X
     
               Market price of finished component to outsiders                $32
               Variable costs per component                     24
               Contribution margin per component                $8

               Total contribution for 20,000 components               $160,000

          Division Y

               Sales price of finished product                    $42
               Variable costs:
                Division X (1 component @ $24)          $24
                Division Y
                Assembly           $9
                Packaging            4     13      - 37
               Contribution margin per unit                    $5

               Total contribution for 20,000 units                    $100,000

     The variable costs of Division Y will be incurred whether it buys from Division X or from an outside supplier. If Division X wants to transfer the components to Division Y for $34 each, the manager of Division Y would:

     a.     not want to buy from Division X, as the same component could be purchased at the market price of $32
     b.     buy from Division X, as this would be in the best interest of the company as a whole
     c.     buy from Division X as long as Division X could supply a large enough quantity to make it profitable to Division Y
     d.     probably ask Division X's manager to split the difference between the $34 and the market price of $32 to arrive at a transfer price of $36


142.      Morgan Company records reveal the following:

          Division X
     
               Market price of finished component to outsiders           $32
          Variable costs per component               24
          Contribution margin per component                $8

          Total contribution for 20,000 components               $160,000

                    Division Y

          Sales price of finished product               $42
          Variable costs:
           Division X (1 component @ $24)          $24
           Division Y
           Assembly           $9
           Packaging            4     13      - 37
          Contribution margin per unit               $5

          Total contribution for 20,000 units               $100,000

     The variable costs of Division Y will be incurred whether it buys from Division X or from an outside supplier. The highest price that Division Y would want to pay Division X for the components would be:

     a.     $24
     b.     $8
     c.     $32
     d.     $22
     
     
143.      Kent Company records reveal the following:

                    Division X
                    
          Market price of finished component to outsiders           $32
          Variable costs per component                24
          Contribution margin per component               $8

          Total contribution for 20,000 components               $160,000

                    Division Y

          Sales price of finished product               $42
          Variable costs:
           Division X (1 component @ $24)          $24
           Division Y
           Assembly           $9
           Packaging            4     13      - 37
          Contribution margin per unit               $5

          Total contribution for 20,000 units               $100,000

     The variable costs of Division Y will be incurred whether it buys from Division X or from an outside supplier. If Division X is working at full capacity, the best transfer price from the viewpoint of the company as a whole would be:

     a.     $42
     b.     $24
     c.     $8
     d.     $32

     
144.      Clarke Company records reveal the following:

                    Division X
                    
          Market price of finished component to outsiders           $32
          Variable costs per component                    24
          Contribution margin per component               $8

          Total contribution for 20,000 components               $160,000

                    Division Y

          Sales price of finished product                    $42
          Variable costs:
           Division X (1 component @ $24)          $24
           Division Y
           Assembly           $9
           Packaging            4     13     - 37
          Contribution margin per unit                    $5

          Total contribution for 20,000 units               $100,000

     The variable costs of Division Y will be incurred whether it buys from Division X or from an outside supplier.      If Division X is working at full capacity, the lowest transfer price it would be willing to accept from Division Y would be:

               a.     $24
          b.     $32
               c.     $8
               d.     $22

     
145.      Robin Company records reveal the following:

                    Division X
                    
          Market price of finished component to outsiders           $32
          Variable costs per component                     24
          Contribution margin per component                $8

          Total contribution for 20,000 components               $160,000

                    Division Y

          Sales price of finished product                    $45
          Variable costs:
           Division X (1 component @ $24)          $24
           Division Y
           Assembly           $9
           Packaging            4     13      - 37
          Contribution margin per unit                    $5

          Total contribution for 20,000 units               $100,000

     The variable costs of Division Y will be incurred whether it buys from Division X or from an outside supplier.      If Division X is not at full capacity, the lowest transfer price at which it would be willing to sell to Division Y would be:

     a.     $32
     b.     $24
     c.     $8
     d.     $22

Find Similar Answers by Subject


Student Reviews

Rate and review your solution! (Please rate on a Scale of 1 - 5. Top Rating is 5.)


Expert's Answer
Download Solution:
$4.00

This solution includes:

  • Plain text
  • Cited sources when necessary
  • Attached file(s)
  • Solution Document(s)



Reach Us

408-538-8534

20-3582-4059

39-008-4233

+1-408-904-6494